Monday, January 25, 2010

Obama's New Plan: The Anti-Stimulus!

This just out at the NYT:
WASHINGTON — President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.
If you're reading this and thinking, "Well, the deficit is out of control," then you need to put down your bullshit, discredited Chicago-School economic theory that got us in this mess in the first place, and read some John Maynard Keynes. Because the one thing you don't do in the middle of a recession is cut spending.

You're supposed to cut spending in the middle of a boom, so you can save some cash for the recessions. Like the one we had earlier in the last decade, when we were in the middle of a massive housing bubble. That was the time to do it. Remember those days? We were wallowing in cash, and yet somehow, the Bush administration managed to run up a record deficit anyway. That was the time to run a surplus. Like Clinton did during his boom years.

Not now. Now is when you run a deficit. If you don't understand how this works, then you should go look it up. Google output gap, or Keynesian economics, or active fiscal policy. Freezing spending right now is dumb. And even if we were in an economic expansion, arbitrarily cutting or freezing all government spending, instead of doing the hard work of deciding which spending is essential and which isn't, is stupid.

But Obama probably knows all this, and is just counting on you not knowing it.

You see, the choice is pretty simple.

A) You can run a deficit, and risk inflation somewhere down the road, but get the economy growing and start creating jobs. This is good for most people, because most people need jobs, and inflation is good for you if you have a mortgage because your income goes up, but your mortgage stays the same.


B) you can cut spending, and reduce the deficit. This will make sure that the safety net is shredded, and that we continue to lose jobs, but inflation is held at bay, and in fact we may get deflation. Deflation is really bad if you're a mortgage holder, but great if you're a bondholder. Of course, the whole reason you keep hearing all the calls for deficit reduction is because the rich fucks who are making all these calls are bondholders, and they know that if they scare you with deficit talk, you'll go along with their plans to rig the system to benefit them instead of everyone else.

And you'll keep thinking that there's a right way and wrong way to run a budget, but in reality, there are ways that are good for some people, and ways that are good for others. Bondholders, Congress, the moneyed elite, and, of course, Obama, are making sure that the people with money get to keep it, and they're setting budget policy to make sure that happens. And Glenn Beck is telling people that Obama is a Marxist, and people are believing him!

Of course Obama isn't planning to cut all spending.
The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.
But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

So, to recap:

We cut funding for things which could actually improve society*, like nutrition programs for the most obese nation on earth, education (education!?), and national parks.

We don't cut funding for our five unnecessary wars, and for foreign aid to countries like Israel.

Pure. Fucking. Genius.

*Farm subsidies for Monsanto can just go away altogether.

Update: I missed this quote:
Republicans were quick to mock the freeze proposal. “Given Washington Democrats’ unprecedented spending binge, this is like announcing you’re going on a diet after winning a pie-eating contest,” said Michael Steel, a spokesman for the House Republican leader, Representative John A. Boehner of Ohio.
Democrats? After 8 years of Bush wars and Bush entitlements and Bush tax cuts for the rich, the Republicans are going to complain about spending? In a recession handed off by...Bush?

The tea-baggers will believe this, of course.